Bopa Moruo Fund II (Pty) Ltd and Others v ASOC I Bidco Three (Pty) Ltd (LM065Aug21) [2021] ZACT 66 (18 October 2021)
- Citation
- [2021] ZACT 66
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Andreas Wessels, Enver Daniels, Thando Vilakazi
- Case number
- LM065Aug21
More details
- Court
- Competition Tribunal
- Panel
- Andreas Wessels, Enver Daniels, Thando Vilakazi
- Case number
- LM065Aug21
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed merger would not result in any horizontal or vertical overlaps, as the acquiring firms do not offer products or services substitutable with those of SkyNet SA. There would be no integration of businesses or negative impact on employment, as the acquiring firms are private equity investors who do not assume management control. The transaction would promote a greater spread of ownership among historically disadvantaged persons and advance transformation objectives. The Tribunal concurred with the Commission's findings that the merger is unlikely to substantially prevent or lessen competition and raises no public interest concerns. Accordingly, the merger was unconditionally approved.
Court disposition
Merger unconditionally approved.
Orders
- The large merger between Bopa Moruo Fund II (Pty) Ltd, RMB Ventures Four (Pty) Ltd, New GX Ventures SA (Pty) Ltd and ASOC I Bidco Three (Pty) Ltd is unconditionally approved.
02
Material facts
Parties
Bopa Moruo Fund II (Pty) Ltd
Applicant Counsel: L MabidikaneRMB Ventures Four (Pty) Ltd
Applicant Counsel: L MabidikaneNew GX Ventures SA (Pty) Ltd
Applicant Counsel: L MabidikaneASOC I Bidco Three (Pty) Ltd
Respondent03
Procedural history
Posture
Merger Review / Decision on Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger is likely to substantially prevent or lessen competition in any relevant market.
- 02
Whether the proposed merger raises any public interest concerns, including employment and spread of ownership.
Party arguments
- Applicant
- The merger parties argued that the transaction would not negatively impact employment, as no retrenchments or integration of businesses would occur. They submitted that the acquiring firms are private equity investors who do not assume management control, thus no duplication of roles or job losses would arise. They further contended that the transaction would promote a greater spread of ownership, increasing the shareholding of historically disadvantaged persons in SkyNet SA, and that transformational objectives would be advanced through active shareholder participation and increased black representation on the board.
- Respondent
- The Competition Commission found no horizontal or vertical overlaps between the parties, as none of the acquiring firms or their managed funds offer products or services substitutable with those of SkyNet SA. The Commission agreed that there would be no negative impact on employment, no integration of businesses, and that the transaction would positively affect the spread of ownership among historically disadvantaged persons. The Commission supported the merger parties' submissions regarding transformation and supply chain support for workers.
05
Court’s reasoning
Legal principles
- 01
Competition Act 89 of 1998
A merger may not be approved if it is likely to substantially prevent or lessen competition in any relevant market, unless the parties can show technological, efficiency or other pro-competitive gains.
- 02
Competition Act 89 of 1998
Public interest considerations, including the effect on employment and the promotion of a greater spread of ownership, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed merger would not result in any horizontal or vertical overlaps, as the acquiring firms do not offer products or services substitutable with those of SkyNet SA. There would be no integration of businesses or negative impact on employment, as the acquiring firms are private equity investors who do not assume management control. The transaction would promote a greater spread of ownership among historically disadvantaged persons and advance transformation objectives. The Tribunal concurred with the Commission's findings that the merger is unlikely to substantially prevent or lessen competition and raises no public interest concerns. Accordingly, the merger was unconditionally approved.
Obiter and limits
- The Tribunal noted the merger parties' commitment to increasing black representation on the board and prioritising the recruitment of black operational executives post-transaction.
- The Tribunal acknowledged SkyNet SA's existing support for workers through supply chain initiatives.
Court disposition
Merger unconditionally approved.
- The large merger between Bopa Moruo Fund II (Pty) Ltd, RMB Ventures Four (Pty) Ltd, New GX Ventures SA (Pty) Ltd and ASOC I Bidco Three (Pty) Ltd is unconditionally approved.
Source and reliance status
Competition Tribunal
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Competition Tribunal
Judgment
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case no: LM065Aug21
Bopa Moruo Fund II (Pty) Ltd
RMB Ventures Four (Pty) Ltd
New GX Ventures SA (Pty) Ltd (Primary Acquiring Firms)
and
ASOC I Bidco Three (Pty) Ltd (Primary Target Firm)
REASONS
FOR DECISION
[1] On 08 October 2021, the Competition Tribunal (“Tribunal”)
unconditionally approved a large merger involving the acquiring firms: Bopa Moruo Fund II (Pty) Ltd (“Bopa Moruo”), RMB Ventures Four (Pty) Ltd (“RMBV”) and New GX Ventures SA (Pty) Ltd (“New GX”), and the target firm ASOC I Bidco Three (Pty) Ltd (“ASOC I Bidco”).
[2] The proposed transaction involves the three acquiring firms each acquiring a [….]% shareholding in ASOC I Bidco through a yet to be established special purpose vehicle. Post-merger, the acquiring firms will jointly control ASOC I Bidco.[1]
[3] The acquiring firms are a consortium of investment companies. Bopa
Moruo is a private equity firm with investments in firms in a variety of industries, including manufacturing, mobile sanitation, digital retail, flexible packaging and freight forwarding. RMBV is a private equity investor which partners with companies to provide flexible equity and debt funding packages. RMBV has investments in firms in a variety of industries, including apparel, stolen vehicle recovery, telecommunications, manufacturing and consumer goods. New GX is an investment company focused on the telecommunications, technology and energy sectors.
[4] ASOC I Bidco is a holding company for its ultimate controller’s
shareholding in SkyNet South Africa (Pty) Ltd (“SkyNet SA”). SkyNet SA is a provider of express parcel and courier services in South Africa.
Effect on competition
[5] The Competition Commission (“Commission”) considered the activities of the merger parties and found no horizontal or vertical overlaps since none of the firms and/or funds managed by the acquiring firms offer products or services which may be reasonably considered to be substitutable with the courier services of SkyNet SA.
Public interest
[6] In relation to employment, the merger parties submitted that there
will be no negative impact on employment nor any retrenchments arising from the proposed merger.
[7] The Commission found that there will be no integration of businesses
that will occur as the acquiring consortium are private equity firms who typically make investments in various businesses without assuming management control. Accordingly, no integration of businesses is envisaged that could conceivably raise duplication of roles and affect employment.
[8] In relation to the spread of ownership, the Commission found that the proposed transaction will have a positive impact on the promotion of a greater spread of ownership. SkyNet SA is currently [….]% owned by historically disadvantaged persons (HDPs) through BEE Holdco. Post-merger, SkyNet SA will ultimately be [….]% owned by HDPs through the equity stakes by Bopa Moruo, RMBV and New GX in Holdco 1 (the SPV to be created). Furthermore, the merger parties submitted that post-merger, the Bopa Moruo and New GX groups will be active shareholders in SkyNet SA who will drive transformational
objectives across ownership, management and the supply chain in SkyNet SA.
[9] The merger parties further submitted that the consortium intends to increase the level of black representation on SkyNet SA’s board post-transaction. The recruitment of black operational executives in the business will be prioritised and this process will commence as soon as practicable post-implementation.
[10] They also submitted that SkyNet SA already provides support to its workers through various supply chain initiatives.
Conclusion
[11] We concur with the Commission’s finding that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, the proposed transaction raises no public interest concerns.
18 October 2021
Mr Andreas Wessels
Date
Mr Enver Daniels and Dr Thando Vilakazi concurring
Tribunal Case Manager: P Kumbirai
For the Merger Parties: L Mabidikane and M Sambo of Bowmans
For the Commission: N Myoli and G Mutizwa
[1] The remaining shares will be held by [….]
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